USD/JPY: markets testing 111.00, an early Xmas present for BoJ?

USD/JPY has jumped through the 111.00 level on the early open in Asia today, marking another new high for H2.

USD/JPY has been better bid since Trump won the elections and markets started to price in fiscal spending and inflationary pressures for the new year ahead in 2017. USD/JPY rallied from 101.17 and has been a steady performer with only two down days since the elections. The stocks were lower at the end of the week, but the dollar remains strong with Fed's Dudley more upbeat at the end of last week. However, the real news on USD/JPY stays with the BoJ's warning to markets last week when they said they are prepared to buy an unlimited amount of securities and despite the weakness in the yen; It seems that the BoJ want speculators to keep away from their currency.

News from the weekend was light and nothing pertaining to any significant moves in FX and we await the FOMC minutes from the week ahead and other key events such as US GDP. We await Japans trade data to kick off the week today and BoJ's board member Takako Masai, who is due to speak and she has warned against excess FX volatility earlier this year as it imposes risks to the economy - The market will be listening again for an indication of the BoJ's sentiment to the sudden fall in the Yen and how this might positively affect the economy or influence their monetary policy and subsequent future action.

USD/JPY levels

USD/JPY holds onto the bullish trend through 110.00 level and the 55 week ma and has now penetrated through 111.00 and potentially targets the 50% retracement at 112.43. "Dips lower should now find that the 107.49 July high offers nearby support. Below here lies the 106.45 200 day ma and the 105.55 May low," suggested analysts at Commerzbank.